Royal Mail owner approves £3.5bn takeover deal with Czech billionaire

Royal Mail owner International Distribution Services (IDS) will be taken over after agreeing a £3.57 billion deal with Czech billionaire Daniel Kretinsky.

Mr Kretinsky’s EP Group vehicle, which already owns 27.6 per cent of the business, made a formal offer for the business after initial proposals earlier this month. The deal will see EP pay 370p per share to investors in IDS.

Shareholders will vote on the deal at IDS’s next annual general meeting in September.

(AFP via Getty Images)

IDS said the offer would see Royal Mail continue its universal service obligation to one-price-goes-anywhere first class post six days a week, and keep the company’s branding and UK headquarters.

It also said it would protect existing employment rights of all IDS staff, and that there is “no intention to make any material changes to overall headcount or reductions in the number of front-line workers” beyond existing plans.

The board said the offer reflects “the progress being made on change at Royal Mail, as well as the execution risks associated with delivering longer term value for shareholders in light of uncertainty over the nature and timing of universal service reform and the need for swift and significant strategic investments”.

The move to purchase IDS is just the latest investment by former lawyer Kretinsky who also has stakes in West Ham United and Sainsbury’s.

Keith Williams, chairman of IDS, said: “IDS has the potential to become a leading international logistics player.

“Both the IDS board and EP are acutely aware of their responsibilities to IDS and particularly to the unique heritage of Royal Mail and its obligations as the designated Universal Service Provider of postal services in the UK.

“The IDS Board has negotiated a far-reaching package of legally binding undertakings and commitments which provide our customers, employees and broader stakeholders with important safeguards.

“These cover the provision of the one-price-goes-anywhere Universal Service Obligation (including First Class letters still delivered six days a week), the financial stability and maintenance of the IDS Group including Royal Mail, the maintenance of employee benefits and pensions, and ensuring Royal Mail remains headquartered and tax resident in the UK.”

Communication Workers Union general secretary Dave Ward said on Wednesday: “We do welcome some of the commitments that have been made but the reality is postal workers across the UK have lost all faith in the senior management of Royal Mail and the service has been deliberately run down.

“We will meet with EP Group next week and call for a complete reset in employee and industrial relations, the restoration of postal services and further commitments on the future of the company.

“We will also be directly engaging with the Labour Party and other stakeholders to call for a new model of ownership for Royal Mail where our members and customers have a direct say in key decisions and the creation of a golden share which will protect a key part of the UK’s communications infrastructure.”

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